Pinching Pennies or Money to Burn? the Role of Grit in Financial Behaviors

We examined grit in the context of a wealth-building situation: tax refund savings. Specifically, we leveraged a novel dataset combining longitudinal survey data with administrative tax data for a sample of 6,904 low- and moderate-income (LMI) tax filers in the United States. After statistically balancing individuals on grit across a range of important characteristics with propensity score weighting, we found that grit was associated with better financial behaviors. Additionally, the influence of grit on savings-related behaviors did not vary across the experience of financial stressors. Lastly, we found that individuals exhibiting higher levels of grit prioritized education spending over gifts, confirming the notion that people exhibiting higher levels of grit are determined and passionate as they pursue their long-term goals.